Market scorecard
US markets were closed yesterday, so here's some information about market seasonality. Since the 1950s, September has been its weakest month for the S&P 500, with an average decline of 0.7% and gains only 43% of the time. The past four Septembers have been particularly rough, with the index falling 4.9%, 9.3%, 4.8%, and 3.9%, respectively. Several factors might explain this trend: investors often return from summer breaks with a more cautious approach to their portfolios, companies begin budget preparations and consider cost-cutting, and mutual funds may engage in "window dressing" by selling losing positions to manage capital-gains distributions.
In company news, ByteDance, the Chinese company behind TikTok, is seeking a $9.5 billion loan, which would be the largest US Dollar-denominated corporate loan in Asia outside of Japan. Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), and JPMorgan (NYSE:JPM) are leading the financing effort. The loan is set for an initial term of three years but can be extended for up to five years, according to sources familiar with the situation.
Izolo, the JSE All-share closed down 0.32%. It was a dull day with nothing else going on.
Bright's banter
CrowdStrike (NASDAQ:CRWD) released quarterly earnings on Wednesday night. The shares initially fell 4% in after-hours trading but quickly turned around and are now 6% higher from Tuesday's close. The cybersecurity firm beat analyst expectations with adjusted earnings per share of $1.04 versus the anticipated 97 cents. Revenue was $963.9 million, a 32% YoY increase, with net income rising to $47 million, up from $8.47 million the previous year.
CrowdStrike slightly reduced its full-year guidance due to a global outage in July that significantly impacted its operations. The outage, caused by a flawed update to its Falcon sensor on Windows computers, led to widespread disruptions including flight cancellations and delayed medical appointments.
Affected companies, like Delta Airlines (NYSE:DAL), incurred hundreds of millions of Dollars in lost revenue and are now suing for damages. CrowdStrike has had to offer discounts and extended payment terms to keep affected customers happy. The backlash hasn't been as bad as the market first feared.
CEO George Kurtz acknowledged the prolonged sales cycles and the need for higher-level deal approvals following the incident. Despite the challenges, most delayed deals remain in the pipeline, suggesting potential for future recovery.
To recap, Crowdstrike uses machine learning to detect any irregularities in IT management tools and also uses a specialised database to find malware on laptops, cellphones, and other devices that access dedicated corporate networks. We're still bullish on Crowdstrike as a company that protects classified information from online criminals.
One thing, from Paul
Our job is to keep our clients out of trouble. So, we are keeping a careful eye on the legal challenges faced by Google (NASDAQ:GOOGL). The US government took them to court in 2020, and a nine-week trial was held in September 2023, where CEOs from the industry all testified. Last month, Federal Judge Amit Mehta said in a 277-page ruling that Google had abused a monopoly over the search business.
The court has directed the parties to meet and confer and provide a proposed schedule regarding remedies proceedings by the 4th of September (tomorrow). It's still uncertain exactly what remedies the Department of Justice will seek. We doubt they will propose anything really problematic for Google shareholders, but you never know.
In addition to the above, Google plans to appeal Judge Mehta's ruling. You can be assured that they have a very high-powered team of lawyers on this case. Either way, nothing will happen fast.
Michael's musings
While Boeing (NYSE:BA) struggled to get two astronauts to the international space station, SpaceX is attempting to get four astronauts the furthest into space since 1972's Apollo 17 spaceflight to the moon. The Polaris Dawn mission was meant to take off last week, but was delayed due to a helium leak. The new blast-off date is scheduled for tomorrow.
The plan is to spend up to 5 days in space collecting as much data as possible. The aim is to get humanity ready to return to the moon, and in time to Mars. Part of the mission will include two astronauts doing a spacewalk, testing the durability and practicality of SpaceX's spacesuits. When you are 1 200 kilometres above the Earth, lots of debris is flying around at high speed. SpaceX says that building a base on the Moon and a city on Mars will require thousands of spacesuits, so scalable manufacturing will be important.
The mission isn't straightforward, and there are several dangers. The altitude they will be operating at is in the Allen radiation belt, and high levels of radiation aren't good for humans or computer systems. Also, when the astronauts do their spacewalk, they won't go through the usual airlock, which seals off the rest of the spacecraft. Instead, they will open a door that exposes the entire craft's interior to space. I assume they simplified the design of the craft by excluding the airlock.
We are watching history take place. You can read more about the mission here - Polaris Dawn.
Signing off
Asian markets are mixed this morning. Equity benchmarks fell in Hong Kong amidst reports that property tycoon Li Ka-shing's shopping mall in the Tsim Sha Tsui district has fallen quiet.
In local company news, Bidvest (JO:BVTJ) posted its full-year performance with revenue rising 6.7% to R122.6 billion, with trading profit climbing 8.5% to R12.4 billion. Elsewhere, Sanlam's (JO:SLMJ) Life division will purchase a 25% stake in African Rainbow Capital Financial Services Holdings. This company oversees African Rainbow Capital Investments' interests in TymeBank, AI Fund, CrossFin Holdings, and Ooba. The deal is valued at R3.9 billion. It's worth noting that Patrice Motsepe, Sanlam's deputy chairman, is also the founder of African Rainbow Capital Investments.
US equity futures are slightly lower pre-market, as traders wake up from the long weekend. The Rand is trading at around R17.79 to the US Dollar.
We will have a proper day of global market trading today, what a win.